Dean Baker has a lot to say about an article in this morning's Times about the current housing market, which, as he points out, seems to be written from the perspective of the mortgage lending industry.
Dean quotes this statement from the article:
“Tighter lending standards are shutting out close to 12.5 million consumers who would qualify in normal times.”
One thing Dean doesn't point out is that the article never defines precisely when it means by “normal times”, but the implication is clear. Later in the same article, as Dean points out, the article states:
Mortgages are roughly seven times harder to get than they were five years ago, according to the Mortgage Bankers Association’s credit availability index, and they show few signs of getting easier.”
So, apparently 2008 was normal times, a time when the mortgage industry was permeated by fraud, was at the top of a ready to burst bubble, and anyone with a heartbeat could qualify for a loan.
Some people might argue that we have returned to normalcy, that while it might be inconvenient for some to be unable to qualify for a mortgage, and for others to not have the values of their homes balloon by 15% to 20% a year, for the rest of us it might be convenient to avoid the negative effects of yet another housing bubble and the inevitable mortgage industry bailout that must follow.
Here's an example of what was once actually normal: The first time I ever applied for a mortgage my wife and I were interested in buying a newly renovated home in the historical district in Mystic. The price was something like $38,500.00. The house is surely worth 10 times that today. We were turned down because the banker felt the house was overpriced by $500.00. Of course, he would have approved us in a second if he didn't have to worry about us re-paying the mortgage, as was the “normal” situation in the bubble years. But he did, so we didn't get the loan. You could argue that he was a bit too conservative, and maybe he was, but then again, that bank still exists and it got exactly $0 in bailout funds.
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